WASHINGTON, DC - The level of commercial/multifamily mortgage debt outstanding grew by 2.6 percent in the fourth quarter, exceeding $3.3 trillion, according to the Mortgage Bankers Association (MBA) analysis of the Federal Reserve Board Flow of Funds data. The total was an increase of $356 billion or 12 percent from the end of 2006.
The $3.3 trillion in commercial/multifamily mortgage debt outstanding recorded by the Federal Reserve was an increase of $84.6 billion from the third quarter 2007. Multifamily mortgage debt outstanding grew to $831 billion, an increase of $28.2 billion or 3.5 percent from the third quarter.
The $28.2 billion increase in multifamily mortgage debt outstanding during the fourth quarter was the largest increase on record, eighty-eight percent of which came from increases in the holdings of the government-sponsored enterprises (GSEs) and Agency-and GSE-backed mortgage pools.
"Fourth quarter increases in the level of mortgage debt outstanding were driven by increases in the holdings of commercial banks and the government-sponsored enterprises (Fannie Mae and Freddie Mac)," said Jamie Woodwell, (photo top right) Senior Director Commercial/Multifamily Research. "Both groups took advantage of capital market disruptions and the lack of CMBS competition to increase their holdings of commercial and multifamily mortgages."
The $3.3 trillion in commercial/multifamily mortgage debt outstanding recorded by the Federal Reserve was an increase of $84.6 billion from the third quarter 2007. Multifamily mortgage debt outstanding grew to $831 billion, an increase of $28.2 billion or 3.5 percent from the third quarter.
The $28.2 billion increase in multifamily mortgage debt outstanding during the fourth quarter was the largest increase on record, eighty-eight percent of which came from increases in the holdings of the government-sponsored enterprises (GSEs) and Agency-and GSE-backed mortgage pools.
"Fourth quarter increases in the level of mortgage debt outstanding were driven by increases in the holdings of commercial banks and the government-sponsored enterprises (Fannie Mae and Freddie Mac)," said Jamie Woodwell, (photo top right) Senior Director Commercial/Multifamily Research. "Both groups took advantage of capital market disruptions and the lack of CMBS competition to increase their holdings of commercial and multifamily mortgages."
The Federal Reserve Flow of Funds data summarizes the holding of loans or, if the loans are securitized, the form of the security. For example, many life insurance companies invest both in whole loans for which they hold the mortgage note (and which appear in this data under Life Insurance Companies) and in commercial mortgage-backed securities (CMBS), collateralized debt obligations (CDOs) and other asset backed securities (ABS) for which the security issuers and trustees hold the note (and which appear here under CMBS, CDO and other ABS issuers).
Commercial banks continue to hold the largest share of commercial/multifamily mortgages, $1.39 trillion, or 42 percent of the total. Many of the commercial mortgage loans reported by commercial banks however, are actually "commercial and industrial" loans to which a piece of commercial property has been pledged as collateral.
It is the borrower's business income - not the income derived from the property's rents and leases - that drives the underwriting, pricing and performance of these loans. A MBA Research PolicyNote found that among the top 10 commercial real estate bank lenders, 48 percent of their aggregate balance of commercial (non-multifamily) real estate loans were related to owner-occupied properties.
Since the other loans reported here are generally income property loans, meaning that the income primarily comes from rents, the commercial bank numbers are not comparable.
Since the other loans reported here are generally income property loans, meaning that the income primarily comes from rents, the commercial bank numbers are not comparable.
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